Zahn v. Fink (In Re Zahn)

367 B.R. 654, 2007 Bankr. LEXIS 798, 2007 WL 817510
CourtUnited States Bankruptcy Appellate Panel for the Eighth Circuit
DecidedMarch 20, 2007
DocketBAP 06-6072WM
StatusPublished
Cited by8 cases

This text of 367 B.R. 654 (Zahn v. Fink (In Re Zahn)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Appellate Panel for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zahn v. Fink (In Re Zahn), 367 B.R. 654, 2007 Bankr. LEXIS 798, 2007 WL 817510 (bap8 2007).

Opinions

KRESSEL, Chief Judge.

The debtor appeals from a bankruptcy court1 order which confirmed her second amended chapter 13 plan. We dismiss the appeal for lack of jurisdiction.

BACKGROUND

The debtor filed her chapter 13 petition on April 11, 2006. On April 25, 2006, she filed her statement of current monthly income along with her schedules. The statement of current monthly income did not include the distribution that her non-filing spouse had taken from his IRA account. Without the inclusion of the money from the IRA distribution in the debtor’s income calculation, her income was below the applicable median income and the applicable plan length was 36 months. See 11 U.S.C. § 1325(b)(4)(A). The debtor’s plan required her to pay the trustee $2,265 per month for 36 months. The plan provided that the non-priority unsecured creditors would receive a dividend of 0% over the duration of the plan.

On May 23, 2006, the trustee objected to confirmation of the debtor’s plan. The basis for the trustee’s objection was the debtor’s omission from her statement of current monthly income of the distribution that her husband took from his IRA account during the six months preceding the bankruptcy. The trustee contended that the distribution should have been included in the debtor’s income report. If the distribution were included in the income report, then the debtor’s income would be above the applicable median income for a family of three in Missouri. The applicable plan commitment period for a debtor with above median income is 60 months versus 36 months for a debtor with below median income. See 11 U.S.C. § 1325(b)(4)(A).

On July 13, 2006, the bankruptcy court denied confirmation of the debtor’s plan. The court ruled that the debtor needed to include her husband’s IRA distribution in her current monthly income, which would require her to file a plan with a commitment period of 60 months. The court granted the debtor 20 days in which to file an amended plan. The debtor filed an appeal, but we dismissed it as interlocutory.

On August 17, the debtor filed an amended statement of current monthly income, which included her husband’s IRA distribution, and an amended plan. The sole change in the amended plan was that the plan length was 60 months instead of 36. Unsecured, non-priority creditors would still receive nothing. The debtor also filed an objection to her own plan. After the trustee objected to confirmation of the first amended plan, the debtor submitted a second amended plan which lowered the monthly payment from $2,265 to $2,190. The plan still had a commitment period of 60 months and the unsecured, non-priority creditors still received nothing. The debtor also filed an objection to [656]*656the second amended plan on the grounds that the IRA distributions should not be treated as income for purposes of determining plan length.

On September 11, 2006, the court overruled the debtor’s objection to her own plan and on October 12, 2006, the court confirmed the debtor’s second amended plan.2 The debtor appealed the order confirming her plan.

DISCUSSION

Orders Denying Confirmation of Plans Are Not Final Orders.

We have jurisdiction over final judgments of the bankruptcy courts. See 28 U.S.C. § 158(a)(1). While an order denying confirmation of a plan would seem to be a final order because it is a final determination of the proceeding regarding confirmation of that plan, under Eighth Circuit precedent, a bankruptcy court order which denies confirmation of a plan, but which does not dismiss the underlying case is not a final order. Lewis v. United States Farmers Home Administration, 992 F.2d 767, 772 (8th Cir.1993); Moix-McNutt v. Coop 212 B.R. 953, 954 (8th Cir. BAP 1997). However, a party may still appeal a non-final order if we grant leave to appeal. See 28 U.S.C. § 158(a)(3).

After dismissal of her first appeal, the debtor was faced with the choice of proposing a new plan consistent with the bankruptcy court’s decision or having her case dismissed and appealing from the dismissal order. We recognize that this is a Hobson’s choice. However, we think that the choice is the necessary result of the Eighth Circuit’s decisions holding orders denying confirmation to be interlocutory and think that by proposing a new plan the debtor has effectively abandoned her old one.

Interlocutory Orders Do Not Later Become Final.

“The prohibition against immediate appeal of most pretrial and trial orders established by the final judgment rule is offset by the rule that once appeal is taken from a truly final judgment that ends the litigation, earlier rulings generally can be reviewed.” 15a Charles Alan Wright, Arthur R. Miller & Ebward H. Cooper, Federal Practioe And PROCEDURE § 3905.1 (2d ed.1992); see Franklin v. District of Columbia, 163 F.3d 625, 630 (D.C.Cir.1998). An appeal from a final judgment permits the appeal of previously entered non-final orders that shaped the scope of that judgment. Davis v. Fulton County, Arkansas, 90 F.3d 1346, 1354 (8th Cir.1996).

The debtor suggests that the order denying confirmation of her first plan “became final” when the confirmation order was entered. Clearly the order which confirmed the debtor’s second amended plan is a final order from which the debtor may appeal. As part of that appeal, we may review any of the orders which led up to the final order. However, the order which denied confirmation of the debtor’s original plan did not become final, and thus appeal-able in its own right, as the debtor contends. The order remains an interlocutory order and may be reviewed only as part of an appeal of a final order, provided that the interlocutory order in some way led to error in the final order.3 But, as we will see in the next section, such review is predicated on an erroneous final order.

[657]*657 The Debtor May Not Appeal From Judgment Entered in Her Favor.

In order to have standing to appeal the decision of the bankruptcy court, an appellant must be a person aggrieved. O’Brien v. Vermont (In re O’Brien), 184 F.3d 140, 142 (2nd Cir.1999). “[A] ‘person aggrieved’ ... must be directly and adversely affected pecuniarily by the order of the [bankruptcy] referee which is challenged.” Hartman Corp. of America v. United States, 304 F.2d 429, 430 (8th Cir.1962). “It is an abecedarian rule that a party cannot prosecute an appeal from a judgment in its favor.” Elkin v. Metropolitan Prop. & Cas. Ins. (In re Shkolnikov),

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Bluebook (online)
367 B.R. 654, 2007 Bankr. LEXIS 798, 2007 WL 817510, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zahn-v-fink-in-re-zahn-bap8-2007.